Custom, Excise & Service Tax Tribunal
M/S. Yash Krishni Food Services Ltd vs Cce Mumbai on 23 December, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. E/1071/11 Mum
Arising out of Order-in-Appeal No. YDB/454/M-II/2011 dated 02.05.2011 passed by the Commissioner of Central Excise (Appeals), Mumbai II.
For approval and signature:
Shri. M.V. Ravindran, Member (Judicial)
Shri. P.K.Jain, Member (Technical)
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Yes
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
M/s. Yash Krishni Food Services Ltd.
:
Appellant
Versus
CCE Mumbai
Respondent
Appearance Shri A.V. Naik, Advocate for appellant Shri V.K. Agarwal, Addl. Commissioner (A.R.) For Respondent CORAM:
Shri. M.V. Ravindran, Member (Judicial) Shri. P.K.Jain, Member (Technical) Date of Hearing : 12.12.2014 Date of Decision :23.12.14 ORDER NO.
Per : P.K.Jain Brief facts of the case are that the appellant is engaged in manufacturing of cakes/ pastries/ biscuits/ cookies/ chocolates. Appellant is selling these products through their franchisees. All the products are being sold under the brand name Ribbons & Balloons. Most of the products carry the brand name and in some of the products when the goods are dispatched to the franchisees, the same are in bulk pack, the franchisees are selling the same with the above mentioned brand name. Further the franchisees have exclusive outlets and they indicate Ribbons and Balloons as their name. The appellant started manufacturing the above mentioned product from October 2005. The dispute in the present case relates to the period October 2005 to 16.07.2007. The appellant was clearing the above mentioned excisable goods by availing SSI Exemption. Revenues case is that the brand name Ribbons and Balloons is owned by M/s. Bharat Cafi Pvt. Ltd. and therefore the brand name does not belong to the appellant and they are not entitled to claim the benefit of SSI Exemption under Notification No.8/2003 dated 01.03.2003 as amended. A demand notice was issued to the appellant on 03.06.2009 invoking extended period of limitation. The same was adjudicated by the original authority wherein a demand of Rs.35,44,512/- was confirmed, interest under Section 11AB was also confirmed and a penalty of an amount equivalent to duty was also imposed under Section 11AC of the Central Excise Act 1944. Aggrieved by the said order the appellant filed an appeal. First appellate authority upheld the order of the adjudicating authority and the appeal was rejected. The appellant is before this Tribunal against the said order of the first appellate authority.
2. The contention of the learned Counsel for the appellant is that the brand name Ribbons and Balloons belongs to the appellant only and the goods were known to the buyers as those of the appellant and not of M/s. Bharat Cafi Pvt. Ltd. and there is no evidence to show that the brand name is of M/s. Bharat Cafi Pvt. Ltd. Other contention is that M/s. Bharat Cafi Pvt. Ltd. is only in Hotel business, they never manufactured the said goods nor are traders of such goods. Further M/s. Bharat Cafi Pvt. Ltd., only applied for registration of the brand to the Registrar of Trade Mark. However, after accepting the application and allotting No. to the applicant, no Brand Registration Certificate is issued to M/s. Bharat Cafi Pvt. Ltd. and M/s. Bharat Cafi Pvt. Ltd., never used the said brand. It was also contended that the department was knowing that they are manufacturing the excisable goods bearing the said brand name and they also applied for excise registration which was granted on 1.12.2006. Learned Counsel contended that in view of the above factual matrix extended period of limitation cannot be invoked. Learned Advocate also contended that the Honble Apex Court in the case of CCE v. Bhalla Enterprises 2004 (173) ELT 225 (SC) held that exemption is not to be denied merely because some other trader, even in a remote area of country had used trade mark earlier. Learned Counsel also stated that three case laws quoted by the Commissioner (Appeals) in his order are totally out of context and are distinguishable in the facts and circumstances of the case. Learned Advocate also quoted the following judgements to support his case:-
(a) P & B Pharmaceuticals Pvt. Ltd. 2003 (55) RLT 275 (S.C.).
(b) CCE Delhi v. Soni & Toni Electrical 2007 (213) ELT 457 (Tri.Del).
(c) General Pharmaceutical Pvt. Ltd. v. CCE Pune I 2007 (218) ELT 86 (Tri. Mumbai)
(d) CCE Ahmedabad II v. Gujarat Health Care 2010 (2650) ELT 140 (Tri. Ahmd).
(e) Elex Knitting Machinery Co. v. Commissioner 2003 (158) ELT 499 (Tri.Del).
(f) Bonny Baby Care Pvt. Ltd. 2014 (02) LCX0013.
It was further submitted that no penalty is imposable in view of the Tribunals judgement in the case of Election Industries Ltd. vs. CCE 2014 (05) LCX0052.
3. Learned A.R. on the other hand argued that there is no dispute about the fact that M/s. Bharat Cafi Pvt. Ltd. had applied for registering the above mentioned trade mark in respect of commodities in question on 22.09.2005 and a provisional certificate was issued to them. Further the above mentioned trade mark was assigned to the appellant by an Agreement dated 21.09.2005 between the appellant and M/s. Bharat Cafi Pvt. Ltd. The said documents very clearly brings out that the said brand name belongs to M/s. Bharat Cafi Pvt. Ltd., and not to the appellant. Learned A.R. quoted the Honble Supreme Courts decision in the case of CCE vs. ACE Auto Comp. Ltd. 2011 (263) ELT 3 (S.C.), CCE Trichy v. Rukmani Pakkwell Traders 2004 (165) ELT 481 (S.C.) and CCE v. Mahaan Dairies 2004 (166) ELT 23 (S.C.) and he stated in view of the above decisions there can be no doubt that the appellant was using the brand name and the brand name undoubtedly belongs to M/s. Bharat Cafi Pvt. Ltd. and hence appellant was having brand name of other person therefore, the appellants are not entitled to SSI Exemption under Notification 8/2003. Learned A.R. also stated that the appellants contention that extended period of limitation cannot be invoked is incorrect as they did not take the registration immediately and they did not inform anything about their activities. The inquiries were started by the Revenue in June 2006 itself and during the preliminary enquiry appellant informed that they were using the brand name of Ribbons and Balloons but did not inform that the said brand name is belongs to M/s. Bharat Cafi Pvt. Ltd., and they were permitted to use the same. Learned A.R. further stated that it is important to note that M/s. Bharat Cafi Pvt. Ltd. is a Private Ltd. Company promoted by one Shri Satish V. Shetty who is the Proprietor of the appellant firm. Under the circumstances it cannot be the case that the appellant was not aware that the said brand name belongs to M/s. Bharat Cafi Pvt. Ltd. This itself shows the willful intention to evade payment of duty. During the investigation the Revenue came to know that the said trade/brand name does not belong to the appellant therefore extended period of limitation has been correctly invoked. Moreover, registration was taken after more than one year of starting the production and much after the enquiries by department was started. Learned A.R. further stated that the appellant cannot be granted cum-duty benefit in view of the judgement of the Honble Apex Court in the case of Amrit Agro Industries Ltd. vs. CCE Ghaziabad 2007 (210) ELT 183 (S.C.). Learned A.R. also stated that the case law quoted are different from the facts and circumstances, for example in the case of Election Industries Ltd. (supra) the issue was penalty on the buyer of the goods and not on the manufacturer and the said judgement has no application what-so-ever in the facts and circumstances of the case. Further in the case of Elex Knitting Machinery Co. (supra) the case was based upon the retracted confessional statement and in those circumstances, the Tribunal has taken a view that the goods cannot be considered as that being using the brand name of other persons. In the case of Bonny Baby Care Pvt. Ltd. (supra) the Company owning the brand name seized to operate and the two partners deceased and in those circumstances, the Tribunal has taken a view that the appellant is the owner of the trade mark. In the present case Nharat Cafi Pvt. Ltd. is a Private Ltd. Company and was existing at the relevant time and even today therefore the case law is not relevant. Similarly other case laws are of no consequence.
4. We have considered the rival submissions.
5. The undisputed fact in the present case are that the goods manufactured by the appellant were being sold with the brand name of Ribbons and Balloons which belong to M/s. Bharat Cafi Pvt. Ltd. The point advanced by the learned Counsel for the appellant is that M/s. Bharat Cafi Pvt. Ltd., were neither manufacturer nor seller nor are trader and therefore cannot be said that the said brand name belongs to them. We are not impressed with this argument. Undoubtedly M/s. Bharat Cafi Pvt. Ltd. has applied for the registration of the brand name with the Trade Mark authorities and the said application was made on 22.09.2005. The said application is for the commodities being manufactured by the appellant. Further the said Company has passed a resolution on 20.09.2005 to assign the said brand name to the appellant and in pursuance to the said resolution, deed of assignment by assailment was prepared by M/s. Bharat Cafi Pvt. Ltd. in the name of the appellant and the same was signed by both and notarized on 21.09.2005. After hearing was over, Learned Counsel for the appellant submitted further written submissions. In the said submissions it is claimed that an application has been made on 13.11.2006 wherein Trade Mark Authority was requested for correction of clerical error in their application and as per the said application the name of the applicant was to be changed as Mr. Satish V. Shetty, Sole Proprietor of the appellant firm. It is not clear from the documents submitted what happened to the said application. To our mind, change of applicant cannot be considered as clerical error that also after more than a year. Moreover, we find that M/s. Bharat Cafi Pvt. Ltd. has submitted a letter dated 19.04.2011 addressed to the Registrar of Trade Mark, Mumbai. The said letter reads as under:-
From the said letter it is very clear that M/s. Bharat Cafi Pvt. Ltd. has filed an application on 22.09.2005. Further the application was accepted and advertised vide TMJ 1373 Regular on 01.08.2007. The letter further states that they are withdrawing the said trade mark application. We note that this letter of M/s. Bharat Cafi Pvt. Ltd. very clearly indicates that during the period from 22.09.2005 to 19.04.2011 the said brand name belongs to them. The period of dispute in the present case is from October 2005 to 16.07.2007 and even the advertisement was made on 1.8.2007.
6. From the facts brought out above we have no hesitation in holding that the said brand name belongs to M/s. Bharat Cafi Pvt. Ltd. during the material period. We have gone through the Notification 8/2003 Condition No.4 is as under,-
4. The exemption contained in this Notification shall not apply to specified goods bearing a brand name or trade name, whether registered or not, of another person Undoubtedly the brand name did not belong to the appellant but to M/s. Bharat Cafi Pvt. Ltd. and therefore, the appellants will not be entitled to the benefit of the said Notification. The fact that M/s. Bharat Cafi Pvt. Ltd. were not manufacturer or trader or seller of the said goods at the relevant time is of no consequence. We therefore hold that the appellants are not entitled for the benefit of Notification 8/2003.
7. We have carefully gone through the case laws quoted by the appellant. We find that the facts in those cases are very different and are distinguishable from the facts in the present case. We do not consider it necessary to discuss each of these cases.
8. The other argument of the learned Counsel was that extended period of limitation is not invokable as they have informed the department vide letter dated 13.6.2006 that they are manufacturing under the brand name Ribbons and Balloons. We have gone through the said letter. This letter was in pursuance to the visit of the Central Excise Officers to the said unit. We also find that after the said letter Proprietor of the appellant Co. was summoned but he did not respond on some or the other pretext and it was after collecting the detailed information the Revenue officer took further steps in the investigation during 2007. Thus the said letter was sent to the department during the course of investigation of the case and therefore the appellant cannot claim that he had informed the department. We also note that in the said letter it clearly suppresses the fact that brand name of Ribbons and Balloons belongs to M/s. Bharat Cafi Pvt. Ltd., and appellant is using the same consequence to a deed of agreement. We are in agreement with the learned A.R.s contention that the Proprietor of the appellant firm is one of the Directors in M/s. Bharat Cafi Pvt. Ltd. and is the main promoter and hence it cannot be assumed that the appellants firm was not aware of the fact that the said brand name belongs to M/s. Bharat Cafi Pvt. Ltd. In fact, conduct of the appellant proves his willful intention to evade duty. Under the circumstances, we hold that extended period of limitation is correctly invoked.
9. Another argument of the appellant is that after crossing exemption limit during 2006-07 (i.e. w.e.f 9.11.2006) they started paying full duty and therefore Revenue cannot demand duty again for the said period. We find force in the argument of the appellant. From the annexure to the show-cause notice as also various ER-1 returns submitted before the Tribunal it is clear that w.e.f 9.11.2006 to 31.03.2006 the appellant has paid full rate of duty as they had crossed the SSI exemption limit. Thus the goods during this period were cleared on payment of duty at normal rate. Department cannot demand the duty again and this part of the demand is therefore, set aside.
10. Another contention of the appellant is that they should be given benefit of cum-duty. We find force in the argument of the appellant. Learned A.R. has quoted the case law of the Honble Supreme Court in the case Amrit Agro Industries Ltd. (supra). The facts of the said case are very different. Their dispute was about the excisability of the goods. In the present case there is no such dispute. In fact after crossing SSI exemption limit the appellant has themselves paid the duty. Under the circumstances in our view the appellant is entitled to the benefit of cum-duty.
11. In view of the above analysis, we upheld the impugned order on merits including extended period of limitation however, demand of duty during 9.11.2006 to 31.3.2007 is set aside as the appellant had already paid the duty. Further for remaining demand, the appellant would be entitled to cum-duty benefit. Original authority is directed to recompute the duty in above terms. The penalty under Section 11AC will also come down in view of the fact that the duty liability of the appellant will come down after excluding the clearances from 9.11.2006 to 31.3.2007 and extending the benefit of cum-duty. The original authority will accordingly impose penalty under Section 11AC equal to the duty after re-computation as above. Interest is also to be computed thereafter.
12. Appeal is disposed of in the above terms.
(Pronounced in Court on .) (M.V. Ravindran) Member (Judicial) (P.K.Jain) Member (Technical) nsk ??
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